The November1, 2012 audit follows on the tail of a
May 2012 interim letter sent to MWAA by the U.S. Department of Transportation’s
Office of the Inspector General.

Audit concerns: The audit identified several red
flags in how the MWAA deals with contracts.

Lack of Competition: MWAA contracts over $200,000 are required
to be competitively procured, but the agency invoked exceptions to the
competitive process for nearly two-thirds of such contracts, often without
adequate or timely justifications. The
agency also

“awarded out-of-scope contract modifications and task orders
without required Board approval, placed large-value task orders without
adequate justification, and distributed work on multiple-award contracts disproportionately.
These practices limit competition
because they allow MWAA to procure significant new work on existing contracts
that could be awarded competitively.”

Ethical concerns: Staff accepted gifts from
contractors totaling at least $12,000, including Super Bowl tickets, travel,
and accommodations, a fishing trip, a trip to New York City to attend a major league
baseball game, trips to golf tournaments, concert tickets.MWAA policies regarding conflicts of interest
do not prevent Board members from exercising inappropriate influence in the
contracting process. Some contracts were
awarded to former board members.The
audit also criticized the agency’s ineffective code of ethics and lack of
training for employees on ethical issues.

Poor contract management: In 27% of the contracts
audited, MWAA allowed work to begin before the contract award date.

Summary of
audit findings:The following are
some of the headings from the audit report relating to procurement and
contracting (the report also criticized MWAA for its personnel and hiring
practices):

MWAA’s contracting policies and practices do not maximize
competition

MWAA does not follow federal best practices to publicize and
solicit contract opportunities

A new ethics code will take effect for board members on
December 1, 2012 and for MWAA employees on January 1, 2013.

About a dozen non-competitive contracts awarded to former
board members have been terminated.

Lessons learned:The following highlights key
procurement and contracting issues that public agencies should be aware of:

Procurement
Policies:Public agencies should have clear procurement
and contracting policies that are communicated to all staff.

Ethical
standards:It is important for public agencies to build
an ethical culture, driven by clear policies and by the example of key
leadership that holds everyone in the agency accountable.

Training:Regular
training on contracting and ethical requirements is critical to ensure that the
policies are actually implemented.

Avoid
politicization of procurement:Establishing a centralized procurement
function and objective standards can help to depoliticize procurement and
contracting issues and build transparency into the process.

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For more than 30 years, I served as a contracting manager for major public agencies in Washington State (City of Seattle, Seattle Housing Authority, and University of Washington). In addition, for more than a decade, I have provided consulting and training to more than 100 public agencies, industry associations, and businesses across the country on the managing the complex world of public procurement and contracting. In March 2015, I discontinued regular postings to Mike Purdy’s Public Contracting Blog in order to focus on speaking and writing a blog and book about U.S. presidential history. Please visit www.PresidentialHistory.com where you can sign up for a free email subscription to my Presidential History Blog. I am still providing consulting and training on public contracting issues.

Copyright 2007-2018 by Michael E. PurdyThe opinions expressed in this Blog are those of the author only. The opinions and information provided in this Blog are for educational and informational purposes only and do not represent legal advice. Mike Purdy is not an attorney. Readers of this Blog are encouraged to consult with an attorney to obtain legal advice. To reproduce or use any of the content of Mike Purdy's Public Contracting blog, please contact Mike Purdy at http://www.mpurdy.com/contact to request permission.